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Market Update

US tsys trading higher, near top of range on moderate futures volume (365k TY), with the 10Y 2.69% (-1.3bps) as mkts await critical vote on Brexit this aft, bonds moving higher on weaker than exp PPI (-0.2% vs -0.1%). Bunds/gilts higher as German GDP rose 1.5% last yr, from 2.2% in 2016 & 17. Equity futures only slightly higher after giving up gains on the back of China’s pledge to add more stimulus.   GOCs higher, in line with tsys after PPI., 10Y 1.94%

News headlines

Canadian dollar slips to a six-day low amid concerns for global economy (TheGlobeAndMail) The Canadian dollar weakened to a six-day low against its U.S. counterpart on Monday, reducing gains since the start of the year as oil prices fell and weak Chinese trade data raised concerns about prospects for the global economy.

JPMorgan cuts loonie forecast as new NAFTA faces turbulence (BNNBloomberg) The bank now expects the Canadian currency to weaken to $1.35 per dollar by the middle of 2019, having previously forecast that it would be around $1.30. A key reason for the pessimism is the fraught outlook for the passage this year of the U.S.-Mexico-Canada Agreement, according to analysts Daniel Hui and Patrick Locke. Ratifying the pact will be “bumpier” than most investors realize given the deep fissures within a split U.S. Congress, as well as an ongoing partial government shutdown.

Stocks Pare Gains as Bonds Advance; Pound Swings: Markets Wrap (BNN) U.S. equity futures and European stocks trimmed gains on Tuesday as the boost from potential China stimulus that spurred Asian shares proved hard to sustain. The pound fluctuated as U.K. politicians prepared for a crunch vote on Brexit.

First U.S. crude cargoes head to China since trade breakthrough (Reuters) Three cargoes of U.S. crude are heading to China from the U.S. Gulf Coast, trade sources said on Monday, the first departures since late September and a 90-day pause in the two countries’ trade war that began last month.

China signals more stimulus as economic slowdown deepens (Reuters) China on Tuesday signaled more stimulus measures in the near term as a tariff war with the United States took a heavy toll on its trade sector and raised the risk of a sharper economic slowdown.

Pound could flop if May loses by more than 100 votes, analysts say (BNN) The pound may manage to hold its ground if Theresa May’s Brexit deal is defeated in Parliament by 100 votes or less, as the market would then eye the odds of the prime minister seeking a second vote, analysts say.

May faces defeat in parliament over Brexit plan (Reuters) Prime Minister Theresa May faced the prospect of defeat in a historic vote on her Brexit deal in parliament on Tuesday, potentially leaving Britain in limbo about the biggest political and economic change for the country in decades.

OPEC leaves market guessing as it struggles to set meeting date (BNN) OPEC and its allies are still struggling to set the date for their next meeting, a sign that the coalition’s increased influence comes at a cost of slower decision-making.

Overnight markets

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.881%	2 Year	2.531%
5 Year	1.89%	5 Year	2.514%
10 Year	1.949%	10 Year	2.693%
30 Year	2.158%	30 Year	3.044%

US Economic Data

8:30 AM	Empire Manufactuting, Jan Est 10.0 Actual 3.9 Prior 10.9
	PPI Final Demand MoM, Dec Est -0.1% Actual -0.2% Prior 0.1%
	PPI Ex Food and Energy MoM, Dec Est 0.2% Actual -0.1% Prior 0.3%
	PPI Final Demand YoY, Dec Est 2.5% Actual 2.5% Prior 2.5%
	PPI Ex Food and Energy YoY, Dec Est 2.9% Actual 2.7% Prior 2.7%

Canadian Economic Data

9:00 AM

Existing Home Sales MoM, Dec Est -1.0% Prior -2.3%

Disclosure and Disclaimer

The following sources of information have been, or may have been, used partially or in their entirety to compile the herein provided CTI Capital Securities Inc. (“CTI Capital”) ‘Morning Comments.’ CTI Capital believes these sources to be generally reliable, however, as said sources are varied and from third parties, CTI Capital cannot guarantee the accuracy or completeness of said information: Canadian Press (CP); Bloomberg News (BN); Wall Street Journal (WSJ); Stone & McCarthy Research Associates (SMRA); New York Times (NYT); Financial Times (FT); Market News International (MNI); Globe and Mail; Associated Press (AP); CNW Group (CNW); Reuters; Business News Network (BNN); Market Watch; and others.

Ivan Greenstein, Stephan Buu, Émile Bordeleau

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilieres Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230

Market Update

US tsys higher, yields 2-4bps lower on avg volume in TY futures (330k), 10Y 2.68% (-3.5bps) . Risk off tone with S&P futures -21pts, European equities -0.7%, crude -1.3%. Bunds, UK gilts higher on weak Chinese trade data with both exports and imports well below expectations. In Canada, GOCs are higher in line with tsys, 10Y 1.93%.  Quiet day in terms of data, Dec CPI the highlight on Fri. Little change in the outlook for rate hikes since BOC last week, ~50% odds of one hike priced in for the entire year, thou post Dec FOMC mkts were briefly priced in a BOC rate cut.

News headlines

China’s trade data drags stock futures ahead of Citi results (Reuters) U.S. stock futures dropped on Monday, after data showed China’s exports unexpectedly shrank the most in two years, raising fears of a sharper slowdown in global economic growth and its impact on corporate profits.

China’s exports shrink most in two years, raising risks to global economy (Reuters) China’s exports unexpectedly fell the most in two years in December, while imports also contracted, pointing to further weakness in the world’s second-largest economy in 2019 and deteriorating global demand.

China says detained former Canadian diplomat does not have diplomatic immunity (Reuters)  Former Canadian diplomat Michael Kovrig, being held in China on suspicion of endangering national security, is not entitled to diplomatic immunity, China’s foreign ministry said on Monday.

Oil falls to $60 on concerns about China slowdown (Reuters) Oil slipped to around $60 a barrel on Monday after data showed weakening imports and exports in China, the world’s second-largest oil consumer, raising the prospect of a slowdown in fuel demand.

May’s no-Brexit warning sends pound to new 7-week high (Reuters) Sterling strengthened to new seven-week highs against the dollar on Monday as markets seized on Prime Minister Theresa May’s warning that lawmakers’ failure to approve her Brexit deal could lead to the UK staying in the European Union.

Newmont to buy Goldcorp in US$10B mega mining deal (BNN) Newmont Mining Corp. () will buy rival Goldcorp Inc. () in a deal valued at US$10 billion, creating the world’s largest gold miner and cementing a return of M&A to the industry.

Overnight markets

US Economic Data

There is no US economic data for today.

Canadian Economic Data

8:30 AM	Teranet/National Bank HPI MoM, Dec -0.3% Prior -0.3%
	Teranet/National Bank HPI YoY, Dec 2.5% Prior 3.1%
	Teranet/National Bank HP Index, Dec 224.07 Prior 224.74

Disclosure and Disclaimer

The following sources of information have been, or may have been, used partially or in their entirety to compile the herein provided CTI Capital Securities Inc. (“CTI Capital”) ‘Morning Comments.’ CTI Capital believes these sources to be generally reliable, however, as said sources are varied and from third parties, CTI Capital cannot guarantee the accuracy or completeness of said information: Canadian Press (CP); Bloomberg News (BN); Wall Street Journal (WSJ); Stone & McCarthy Research Associates (SMRA); New York Times (NYT); Financial Times (FT); Market News International (MNI); Globe and Mail; Associated Press (AP); CNW Group (CNW); Reuters; Business News Network (BNN); Market Watch; and others.

Ivan Greenstein, Stephan Buu, Émile Bordeleau

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilieres Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230

Market Update

US tsys trading higher, close to o/n highs on strong volume (423k TY), 10Y 2.71 (-3bps) with the curve steeper – Dec CPI expected to have declined 0.1% m/m , core +0.2%. US equity futures lower, S&P -8, Nasdaq -30.  Speculation that Trump may call a state of emergency has buoyed tsys, which are outperforming both bunds and gilts.  UK gilts reversed earlier gains on report Brexit could be delayed beyond March 29th .   GOCs higher, in line with tsys, 10Y 2.95%. USDCAD lower, 1.32 25 as crude  close to one month highs 52.33.

News headlines

Powell says Fed has room to be patient as economy evolves in 2019 (TheGlobeandMail) Federal Reserve Chairman Jerome Powell said on Thursday the U.S. central bank has the ability to be patient on policy given inflation is stable, allowing it to assess whether the U.S. economy will slow this year as some in financial markets worry.

Canadian dollar keeps most of its recent gains as oil prices rise (TheGlobeandMail) The Canadian dollar weakened against its U.S. counterpart on Thursday as the greenback broadly climbed, but the loonie held on to most of its recent gains as stocks and oil prices turned higher.

China to set lower GDP growth target of 6-6.5 percent in 2019 (Reuters) China plans to set a lower economic growth target of 6-6.5 percent in 2019 compared with last year’s target of “around” 6.5 percent, policy sources told Reuters, as Beijing gears up to cope with higher U.S. tariffs and weakening domestic demand.

Small steps from stocks after rally, giant leap for yuan (Reuters) Soothing words from the world’s top central banks helped stocks consolidate a strong start to 2019 on Friday, while China’s yuan capped its best week since it shed its dollar peg in 2005.

Oil set for weekly gain on trade optimism, OPEC-led supply cuts (Reuters) Oil prices rose slightly on Friday, putting them on track for solid weekly gains after financial markets strengthened due to hopes the United States and China may soon resolve their trade dispute.

TSX futures point to lower opening (Reuters) Stock futures for Canada’s main stock index edged lower on Friday, a day after hitting a one-month high following a five-day rally.

Pound pares gains as government denies Brexit date might be delayed (BNN) The pound rallied to the highest since November on a report that Brexit could be delayed beyond the March deadline, before paring gains as the government ruled out an extension.

Larger drop in weekly jobless claims points to healthy U.S. economy (TheGlobeandMail) The number of Americans filing applications for jobless benefits fell more than expected last week, pointing to sustained labour market strength that could further assuage concerns about the economy’s health.

Overnight markets

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.895%	2 Year	2.545%
5 Year	1.904%	5 Year	2.537%
10 Year	1.965%	10 Year	2.713%
30 Year	2.17%	30 Year	3.043%

US Economic Data

8:30 AM	CPI Mom, Dec 0.0% -0.1% est -0.1%
	CPI Ex Food and Energy MoM, Dec 0.2% est 0.2%
	CPI Ex Food and Energy YoY, Dec 2.2% est 2.2%
	CPI YoY, Dec 2.2% est 1.9%

Canadian Economic Data

There is no Canadian economic data for today.

Disclosure and Disclaimer

The following sources of information have been, or may have been, used partially or in their entirety to compile the herein provided CTI Capital Securities Inc. (“CTI Capital”) ‘Morning Comments.’ CTI Capital believes these sources to be generally reliable, however, as said sources are varied and from third parties, CTI Capital cannot guarantee the accuracy or completeness of said information: Canadian Press (CP); Bloomberg News (BN); Wall Street Journal (WSJ); Stone & McCarthy Research Associates (SMRA); New York Times (NYT); Financial Times (FT); Market News International (MNI); Globe and Mail; Associated Press (AP); CNW Group (CNW); Reuters; Business News Network (BNN); Market Watch; and others.

Ivan Greenstein, Stephan Buu, Émile Bordeleau

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilieres Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230